Washington state sixth most business-friendly state in nation

The tax climate of Washington state ranks sixth this year out of all 50 states, according to a new report by the Tax Foundation. The Evergreen State’s rank remains unchanged from 2013 in the 2014 State Business Tax Climate Index.

Several states have moved in the rankings since last year, with Texas dropping out of the top ten for the first time, landing at #11, and Virginia and Kentucky both falling three places to #26 and #27, respectively.

On the positive side, Arizona climbed five ranks to #22 and Kansas shot up six spots to #20. Several other states also saw smaller changes.

“The states that lost ground this year usually did so because they changed policy in a way that makes the tax code more complex, burdensome or economically harmful,” said Tax Foundation Economist Scott Drenkard.

“By contrast, the states that improved did so because they are moving closer to a tax code that collects revenue without unnecessarily distorting business decisions. Their tax codes became more neutral,” he said.

The State Business Tax Climate Index, now in its 10th edition, collects data on more than a hundred tax provisions for each state and synthesizes them into a single, easy-to-use score. The states are then compared against each other, so that each state’s ranking is relative to actual policies in place in other states around the country.

A state’s ranking can rise or fall significantly based not just on its own actions, but on the changes or reforms made by other states.

The top ten business-friendly states for the coming year are Wyoming, South Dakota, Nevada, Alaska, Florida, Washington, Montana, New Hampshire, Utah and Indiana, respectively.

The 10 lowest ranked states in which to maintain a business are Maryland, Connecticut, Wisconsin, North Carolina, Vermont, Rhode Island, Minnesota, California, New Jersey and New York.

“The goal of the State Business Tax Climate Index is to start a conversation with policy makers about how their states fare against the rest of the country,” said Drenkard.

“With this report, we’re asking, how well is your tax code structured? Are businesses in your state spending too much time complying with onerous tax provisions? Are you double taxing things you shouldn’t?”

The Tax Foundation is a non-partisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937.